Plan and loan types and thresholds
With effect from April 2019, the thresholds for making Student Loan deductions are:
- Plan 1 – £18,935 annually (£1577.91 a month or £364.13 a week)
- Plan 2 – £25,725 annually (£2143.75 a month or £494.71 a week)
Repayments for Plan 1 and Plan 2 are calculated at 9% of the income above the threshold.
Postgraduate Loans (PGL) – £21,000 (£1750 a month or £403.84 a week)
Repayments for PGL are calculated at 6% of the income above the threshold.
Starting Student loan and PGL deductions, checking plan and loan type
You should work out the correct figure of employee earnings on which Student Loan and PGL deductions are due. The figure to use is the same gross pay amount that you would use to calculate your employer’s secondary Class 1 National Insurance contributions.
From 6 April 2019 your employee may be liable to repay a PGL at the same time as a Plan 1 or Plan 2 loan. If so, they’ll be due to repay 15% of the amount they earn over the threshold.
Start making Student Loan and PGL deductions from the next available payday using the correct plan and loan type, which you will select on your HMRC submission, if any of the following apply:
- your new employee’s P45 shows deductions should continue – ask your employee to confirm their plan and loan type
- your new employee tells you they’re repaying a Student Loan – ask your employee to confirm their plan and loan type
- your new employee fills in a starter checklist showing they have a Student Loan – the checklist should tell you which plan type and loan type to use, if your employee has both plan type 1 and 2, ask them to check with the Student Loan Company for the correct plan type to take deductions under otherwise, default to plan type 1 until you receive a student loan start notice SL1 that HMRC sends you
- HMRC sends you form SL1 ‘Start Notice’ – this will tell you which plan type to use
- HMRC sends you form PGL1 ‘Start Notice’ – this will tell you they have a PGL
- you receive a Generic Notification Service Student Loan reminder – ask your employee to confirm their plan and loan type
If your employee does not know which plan or loan type they’re on, ask them to check with the Student Loan Company (SLC). If they’re still unable to confirm their plan or loan type, start making deductions using Plan type 1 until you receive further instructions from HMRC – defaulting to Plan 1 is only available for Plan 1 or Plan 2 loans.